The promise of stimulus checks and new programs like former Democratic presidential nominee Andrew Yang’s promised $1,000 “Freedom Dividend” reignites the universal basic income discussion and illuminates why it’s a terrible idea.
Besides damaging the longevity of economic stimulation and health, universal basic income (UBI) dances into the danger zone of becoming a sure-fire way to kill incentives for Americans to work and could trigger inflation and diminish personal responsibility.
UBI is a government program in which “every adult citizen receives a set amount of money on a regular basis,” as defined by Investopedia.
More specifically, UBI is different from other basic income experiments around the world because it establishes regular, unconditional payments for workers in cash, according to a Sept. 18, 2020 VisualCapitalist.com article.
Opening the mailbox and finding a monthly check from Uncle Sam might sound nice, but it’s not sustainable.
There’s no such thing as free money and it has to come from somewhere.
Money from the government is money from taxpayers, potentially raising the U.S. national debt more than a trillion dollars.
According to an Aug. 19, 2020 TheBalance.com article, a finance and economics blog, UBI “would add $1.2 trillion to the [U.S. federal budget] deficit” based on an example considering 179 million working-age adults in 2012. That budget deficit would likely be higher in 2021.
National debt is already in the trillions and that debt means cuts to federal programs, but Yang’s got the problem sorted.
Yang’s “Freedom Dividend” plan from his failed presidential bid aimed to give Americans $1,000 per month to stimulate the economy, but that sounds more like slapping a Band-Aid on a gash.
The same economic stimulation could be achieved through domestic and international policy changes, corporate tax cuts and incentives to keep businesses in the U.S.
Sending taxpayers’ money back to them monthly will not create lasting changes that solid policies could.
Nothing good comes when money flows without an equal production of goods and services.
However, researchers from Stockton, California conducted a UBI experiment and said their program is successful.
The Stockton Economic Empowerment Demonstration “gave randomly selected residents $500 per month for two years with no strings attached – measurably improved participants’ job prospects, financial stability and overall well-being,” according to a March 5
NPR article.
Researchers for the Stockton study found “individuals spent most of the money on basic needs, including food, merchandise, utilities and auto costs, with less than 1% going toward alcohol and/or tobacco.”
Coming across an unattended $20 on the sidewalk would improve anyone’s well-being, but how many Americans would use that money for necessities such as groceries or bills? How many would take themselves out to lunch?
If people were honest in their survey answers, then kudos to them.
If this model was applied nationally on the other hand, how many would use taxpayer-funded UBI checks for frivolous or illegal purchases instead of alleviating the demanding financial pressures of burdening bills, rent and medical care, to name a few?
Everyone falls short on cash sometimes and some Americans spend their whole lives in poverty. The Constitution guarantees three inalienable rights: the right to life, liberty and the pursuit of happiness.
The achievement of happiness is not guaranteed.
The burden of financial security shouldn’t fall on the shoulders of the government. It is up to each individual.
You can call it a handout or you can call it socialism, but UBI is a pretty promise hiding its flaws.
The idea that those living in poverty will turn their financial world around, or the possibility that the accrued national debt won’t run the country into the ground isn’t promised.
It’s a flashy idea, but you have to dress it up to make it look nice or it won’t sell. If that is the case, then UBI probably isn’t worth buying into in the first place.
